Dynatrace Reports Fourth Quarter and Full Year Fiscal 2024 Financial Results

Rhea-AI Summary

Dynatrace (NYSE: DT) reported its fourth quarter and full year fiscal 2024 financial results, surpassing its guidance on key metrics. The company achieved a 21% increase in total revenue, reaching $381 million for the quarter, and an annual recurring revenue (ARR) of $1.504 billion, marking a 20% growth. Subscription revenue also saw a 23% rise, amounting to $360 million. The GAAP operating margin was recorded at 9%, with a non-GAAP operating margin of 28%. Additionally, Dynatrace announced a $500 million share repurchase program.

For the full fiscal year 2024, the total revenue was $1.431 billion, reflecting a 23% increase, and the subscription revenue grew by 25% to $1.359 billion. The company reported GAAP EPS of $0.52 and non-GAAP EPS of $1.20. Moreover, Dynatrace closed a record number of high-value deals and completed the acquisition of Runecast, enhancing its AI-driven security capabilities.

Positive

• Total revenue for Q4 FY24: $381 million, up 21%
• Total revenue for FY24: $1.431 billion, up 23%
• ARR for Q4 FY24: $1.504 billion, up 20%
• Q4 FY24 Subscription revenue: $360 million, up 23%
• FY24 Subscription revenue: $1.359 billion, up 25%
• GAAP operating margin for FY24: 9%
• Non-GAAP operating margin for FY24: 28%
• Q4 FY24 GAAP EPS: $0.13, Non-GAAP EPS: $0.30
• FY24 GAAP EPS: $0.52, Non-GAAP EPS: $1.20
• Record 18 high-value deals closed in Q4 FY24
• Successful acquisition of Runecast
• Introduction of a $500 million share repurchase program

Negative

• GAAP net income for Q4 FY24: $37.9 million, down from $80.3 million
• Q4 FY24 GAAP net income per share diluted: $0.13, down from $0.27
• GAAP net income per share diluted for FY24: $0.52, lower than non-GAAP EPS
• Free cash flow for Q4 FY24: $121 million, marginally up from $114 million
• GAAP shares outstanding diluted for Q4 FY24: 300.9 million, up from 293.9 million, indicating potential dilution

Insights

Financial Analyst

Dynatrace’s financial performance for fiscal 2024 showcases robust growth, with key metrics like Annual Recurring Revenue (ARR) rising by 21% and total revenue growing by 23% year-over-year. The non-GAAP operating margin of 28% reflects strong operational efficiency. ARR is a important metric for subscription-based companies, indicating the company's ability to secure long-term revenue streams. The rise in subscription revenue by 25% underscores the company's successful shift towards a recurring revenue model, ensuring better revenue predictability.

The announcement of a $500 million share repurchase program is a signal of confidence from the management in the company's future prospects. This move is expected to enhance shareholder value by reducing the number of outstanding shares, potentially increasing earnings per share (EPS).

It’s noteworthy that Dynatrace continues to manage impressive financial growth while also maintaining a healthy balance sheet, as evidenced by their $346 million in free cash flow. This cash flow gives the company flexibility to invest further in growth opportunities, including potential strategic acquisitions.

Market Research Analyst

The context of Dynatrace's performance in the broader market is equally vital. The company’s focus on unified observability and AI-driven analytics positions it well within the growing trend towards integrated IT infrastructure management solutions. The increase in large deals, including a notable 9-figure total contract value deal with Accenture, reflects strong market acceptance and potential for continued growth in enterprise segments.

From the market perspective, the demand for comprehensive monitoring and observability solutions is on the rise as enterprises aim to reduce complexity and costs associated with fragmented tools. Dynatrace’s strategy to consolidate and automate these processes using AI-driven insights is a competitive advantage, likely to attract more substantial enterprise contracts.

Tech Expert

Dynatrace’s advancements in contextual analytics, AI and automation are important differentiators in the tech landscape. The integration of Runecast’s AI-powered security into Dynatrace’s platform enhances its value proposition by addressing cloud security and compliance proactively. This integration allows Dynatrace to offer real-time vulnerability assessments, positioning the company ahead in a market that highly values security and compliance capabilities.

Furthermore, their recognition in industry reports like the GigaOm Radar for Cloud Observability Solutions and Gartner Peer Insights™ validates their technological leadership and customer satisfaction, providing an additional layer of credibility and competitive edge.

Exceeds high end of guidance across all FY24 metrics

Delivers ARR growth of 20% year-over-year on a constant currency basis

Achieves FY24 GAAP Operating Margin of 9% and Non-GAAP Operating Margin of 28%

Announces $500 million share repurchase program

WALTHAM, Mass.--(BUSINESS WIRE)-- Dynatrace (NYSE: DT), the leader in unified observability and security, today announced financial results for the fourth quarter and full year ended March 31, 2024.

“Dynatrace delivered a strong finish to fiscal 2024. Our fourth quarter results exceeded guidance across all key operating metrics, fueled in part by a record number of 7-figure deals closed in the quarter,” said Rick McConnell, Chief Executive Officer. “We continue to see a growing number of companies looking to consolidate often ineffective and costly monitoring tools into a unified observability platform. We believe that our contextual analytics, AI leadership, and automation differentiate us in the market and empower us to capture this opportunity.”

Dynatrace also announced today that its Board of Directors has authorized a share repurchase program for up to $500 million of common stock.

“The share repurchase program demonstrates our confidence in the business and conviction in our future growth prospects,” said Jim Benson, Chief Financial Officer. “While investing in the business is our foremost priority, this program allows us to leverage our strong balance sheet and cash flow opportunistically to drive shareholder return while also allowing us the flexibility to consider strategic acquisitions to accelerate growth and deliver business value for our customers.”

All growth rates are compared to the fourth quarter and full year of fiscal 2023 unless otherwise noted.

Fourth Quarter Fiscal 2024 Financial Highlights:

• Total ARR of $1,504 million, an increase of 21%, or 20% on a constant currency basis
• Total Revenue of $381 million, an increase of 21%, or 21% on a constant currency basis
• Subscription Revenue of $360 million, an increase of 23%, or 22% on a constant currency basis
• GAAP Income from Operations of $23 million and Non-GAAP Income from Operations of $95 million
• GAAP EPS of $0.13 and non-GAAP EPS of $0.30, on a dilutive basis

Full Year Fiscal 2024 Financial Highlights:

• Total Revenue of $1,431 million, an increase of 23%, or 22% on a constant currency basis
• Subscription Revenue of $1,359 million, an increase of 25%, or 24% on a constant currency basis
• GAAP Income from Operations of $128 million and Non-GAAP Income from Operations of $398 million
• GAAP EPS of $0.52 and non-GAAP EPS of $1.20, on a dilutive basis
• GAAP Operating Cash Flow of $378 million and Free Cash Flow of $346 million

Business Highlights:

• Go-to-market traction: We closed a record 18 deals greater than $1 million in annual contract value (ACV) in the quarter. Fifteen of these deals were in collaboration with partners, including our first-ever 9-figure total contract value (TCV) deal, which was an expansion deal closed in conjunction with Accenture. We also closed our largest new logo win, a nearly 8-figure ACV deal.

• Industry recognition: We were named a Leader in the 2024 GigaOm Radar Report for Cloud Observability Solutions, positioned as the vendor closest to the center of the radar, reflecting Dynatrace's industry-leading innovation and ability to deliver the highest impact for customers.

• Customer recognition: Dynatrace was also recognized as a Customers' Choice in the 2024 Gartner^® Peer Insights™ Voice of the Customer for Digital Experience Monitoring report, the only vendor with this distinction.¹

• Runecast acquisition: We successfully closed the acquisition of Runecast, an AI-powered security and compliance solution provider. We are integrating Runecast technology into the Dynatrace platform to enable customers to prevent cloud misconfigurations and compliance issues proactively with automated, AI-driven, real-time vulnerability assessments.

Share Repurchase Program

Share repurchases under the new $500 million program may be made from time to time on the open market, pursuant to Rule 10b5-1 trading plans, or other legally permissible means. The share repurchase program has no time limit, does not obligate Dynatrace to acquire a specified number of shares, and may be suspended, modified, or terminated at any time, without prior notice. The number of shares to be repurchased will depend on market conditions and other factors. Repurchases under the program are expected to be funded from a combination of existing cash balances and future cash flow.

_____________________ 1 Gartner, Peer Insights Voice of the Customer: Digital Experience Monitoring, 24 April 2024.   Gartner and Gartner Peer Insights™ are trademarks of Gartner, Inc. and/or its affiliates. All rights reserved.   Gartner® Peer Insights™ content consists of the opinions of individual end users based on their own experiences, and should not be construed as statements of fact, nor do they represent the views of Gartner or its affiliates. Gartner does not endorse any vendor, product or service depicted in this content nor makes any warranties, expressed or implied, with respect to this content, about its accuracy or completeness, including any warranties of merchantability or fitness for a particular purpose.

Fourth Quarter 2024 Financial Highlights (Unaudited – In thousands, except per share data)
	Three Months Ended March 31,
		2024				2023
Key Operating Metric:
Annual recurring revenue (ARR)	$	1,503,819			$	1,246,681
Year-over-Year Increase		21	%
Year-over-Year Increase - constant currency (*)		20	%
Total revenue	$	380,848			$	314,475
Year-over-Year Increase		21	%
Year-over-Year Increase - constant currency (*)		21	%
Subscription revenue	$	360,109			$	293,314
Year-over-Year Increase		23	%
Year-over-Year Increase - constant currency (*)		22	%
GAAP Financial Measures:
GAAP income from operations	$	23,123			$	19,431
GAAP operating margin		6	%			6	%
GAAP net income	$	37,944			$	80,293
GAAP net income per share - diluted	$	0.13			$	0.27
GAAP shares outstanding - diluted		300,867				293,917
Net cash provided by operating activities	$	131,672			$	120,427
Non-GAAP Financial Measures:
Non-GAAP income from operations (*)	$	95,093			$	77,935
Non-GAAP operating margin (*)		25	%			25	%
Non-GAAP net income (*)	$	89,401			$	92,459
Non-GAAP net income per share - diluted (*)	$	0.30			$	0.31
Non-GAAP shares outstanding - diluted (*)		300,867				293,917
Free Cash Flow (*)	$	121,262			$	114,512

Full Year 2024 Financial Highlights (Unaudited – In thousands, except per share data)
	Year Ended March 31,
		2024				2023
Revenue:
Total revenue	$	1,430,530			$	1,158,530
Year-over-Year Increase		23	%
Year-over-Year Increase - constant currency (*)		22	%
Subscription revenue	$	1,359,354			$	1,083,330
Year-over-Year Increase		25	%
Year-over-Year Increase - constant currency (*)		24	%
GAAP Financial Measures:
GAAP income from operations	$	128,400			$	92,811
GAAP operating margin		9	%			8	%
GAAP net income	$	154,632			$	107,959
GAAP net income per share - diluted	$	0.52			$	0.37
GAAP shares outstanding - diluted		299,280				291,617
Net cash provided by operating activities	$	378,109			$	354,885
Non-GAAP Financial Measures:
Non-GAAP income from operations (*)	$	398,239			$	291,791
Non-GAAP operating margin (*)		28	%			25	%
Non-GAAP net income (*)	$	358,117			$	282,224
Non-GAAP net income per share - diluted (*)	$	1.20			$	0.97
Non-GAAP shares outstanding - diluted (*)		299,280				291,617
Free Cash Flow (*)		346,382				333,345

* Use of Non-GAAP Financial Measures

In our earnings press releases, conference calls, slide presentations, and webcasts, we may use or discuss non-GAAP financial measures, as defined by Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the consolidated financial statements. Our earnings press releases containing such non-GAAP reconciliations can be found in the Investor Relations section of our website at ir.dynatrace.com.

Financial Outlook

Based on information available as of May 15, 2024, Dynatrace is issuing guidance for the first quarter and full year fiscal 2025 in the table below. This guidance is based on foreign exchange rates as of April 30, 2024. The total foreign exchange headwind for fiscal 2025 is expected to be approximately $10 million on ARR and revenue.

Growth rates for ARR, Total revenue, and Subscription revenue are presented in constant currency to provide better visibility into the underlying growth of the business.

All growth rates are compared to the first quarter and full year of fiscal 2024 unless otherwise noted.

(In millions, except per share data)	First Quarter Fiscal 2025		Full Year Fiscal 2025*
ARR	-		$1,720 - $1,735
As reported	-		14% - 15%
Constant currency	-		15% - 16%
Total revenue	$391 - $393		$1,644 - $1,658
As reported	17% - 18%		15% - 16%
Constant currency	18% - 19%		16% - 17%
Subscription revenue	$374 - $376		$1,571 - $1,585
As reported	18% - 19%		16% - 17%
Constant currency	19%		16% - 17%
Non-GAAP income from operations	$105 - $108		$459 - $467
Non-GAAP operating margin	27% - 27.5%		28%
Non-GAAP net income	$86 - $89		$383 - $392
Non-GAAP net income per diluted share	$0.29 - $0.30		$1.26 - $1.29
Diluted weighted average shares outstanding	301 - 302		303 - 305
Free cash flow	-		$386 - $398
Free cash flow margin	-		23.5% - 24%
*Guidance growth rates rounded to the nearest percentage point.

Reconciliations of non-GAAP income from operations, non-GAAP net income, non-GAAP net income per diluted share and free cash flow guidance to the most directly comparable GAAP measures are not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of share-based compensation expense, employer taxes and tax deductions specific to equity compensation awards that are directly impacted by future hiring, turnover and retention needs, as well as unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.

Conference Call and Webcast Information

Dynatrace will host a conference call and live webcast to discuss its results and business outlook at 8:00 a.m. Eastern Time today, May 15, 2024. To access the conference call from the U.S. and Canada, dial (866) 405-1247, or internationally, dial (201) 689-8045 with event confirmation #: 13746345. The call will also be available live via webcast on the company’s website, ir.dynatrace.com.

An audio replay of the call will also be available until 11:59 p.m. Eastern Time on July 15, 2024, by dialing (877) 660-6853 from the U.S. or Canada, or for international callers by dialing (201) 612-7415 and entering event confirmation #: 13746345. In addition, an archived webcast will be available at ir.dynatrace.com.

We announce material financial information to our investors using our Investor Relations website, press releases, SEC filings and public conference calls and webcasts. We also use these channels to disclose information about the company, our planned financial and other announcements, attendance at upcoming investor and industry conferences, and for complying with our disclosure obligations under Regulation FD.

Non-GAAP Financial Measures & Key Metrics

In addition to disclosing financial measures prepared in accordance with GAAP, this press release and the accompanying tables contain certain non-GAAP financial measures.

Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Dynatrace considers these non-GAAP financial measures to be important because they provide useful indicators of its performance and liquidity measures. These are key measures used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short and long-term operational plans. In addition, investors often use similar measures to evaluate the performance of a company. Non-GAAP financial measures are presented for supplemental informational purposes only for understanding the company’s operating performance. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP financial measures presented by other companies. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the consolidated financial statements.

Dynatrace presents constant currency amounts for Revenue and Annual Recurring Revenue to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. Dynatrace provides this non-GAAP financial information to aid investors in better understanding our performance.

Annual Recurring Revenue (ARR) is defined as the daily revenue of all subscription agreements that are actively generating revenue as of the last day of the reporting period multiplied by 365. We exclude from our calculation of Total ARR any revenues derived from month-to-month agreements and/or product usage overage billings.

Constant Currency amounts for ARR, Total Revenue and Subscription Revenue are presented to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign exchange rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year.

Dynatrace Customers are defined as accounts, as identified by a unique account identifier, that generate at least $10,000 of Dynatrace ARR as of the reporting date. In infrequent cases, a single large organization may comprise multiple customer accounts when there are distinct divisions, departments or subsidiaries that operate and make purchasing decisions independently from the parent organization. In cases where multiple customer accounts exist under a single organization, each customer account is counted separately based on a mutually exclusive accounting of ARR.

Free Cash Flow is defined as net cash provided by (used in) operating activities less capital expenditures (reflected as "purchase of property and equipment" and "capitalized software additions" in our financial statements).

About Dynatrace

Dynatrace (NYSE: DT) exists to make the world’s software work perfectly. Our unified platform combines broad and deep observability and continuous runtime application security with Davis^® hypermodal AI to provide answers and intelligent automation from data at an enormous scale. This enables innovators to modernize and automate cloud operations, deliver software faster and more securely, and ensure flawless digital experiences. That’s why the world’s largest organizations trust the Dynatrace^® platform to accelerate digital transformation.

Cautionary Language Concerning Forward-Looking Statements

This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding management’s expectations related to industry trends, future financial and operational performance and operational expenditures and investments, the share repurchase program and sources and uses of capital, expected growth, and business outlook, including our financial outlook for the first quarter and full year of fiscal 2025. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, our ability to maintain our revenue growth rates in future periods; market adoption of our product offerings; continued demand for, and spending on, our solutions; our ability to innovate and develop solutions that meet customer needs, including through Davis AI; the ability of our platform and solutions to effectively interoperate with customers’ IT infrastructures; our ability to acquire new customers and retain and expand our relationships with existing customers; our ability to expand our sales and marketing capabilities; our ability to compete; our ability to maintain successful relationships with partners; security breaches, other security incidents and any real or perceived errors, failures, defects or vulnerabilities in our solutions; our ability to protect our intellectual property; our ability to hire and retain necessary qualified employees to grow our business and expand our operations; our ability to successfully complete acquisitions and to integrate newly acquired businesses and offerings; the effect on our business of the macroeconomic environment, associated global economic conditions and geopolitical disruption; and other risks set forth under the caption “Risk Factors” in our Form 10-Q filed on February 8, 2024 and our other SEC filings, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, which we plan to file later this month. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

DYNATRACE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)
	Three Months Ended March 31,							Twelve Months Ended March 31,
		2024			2023				2024				2023
	(unaudited)
Revenue:
Subscription	$	360,109			$	293,314		$	1,359,354			$	1,083,330
Service		20,739				21,161			71,176				75,200
Total revenue		380,848				314,475			1,430,530				1,158,530
Cost of revenue:
Cost of subscription		50,181				39,052			184,765				144,445
Cost of service		17,462				16,618			65,423				62,882
Amortization of acquired technology		4,230				3,895			16,265				15,564
Total cost of revenue		71,873				59,565			266,453				222,891
Gross profit		308,975				254,910			1,164,077				935,639
Operating expenses:
Research and development		84,271				61,502			304,739				218,349
Sales and marketing		148,788				124,702			534,233				448,015
General and administrative		47,338				42,702			174,412				150,172
Amortization of other intangibles		5,455				6,573			22,293				26,292
Total operating expenses		285,852				235,479			1,035,677				842,828
Income from operations		23,123				19,431			128,400				92,811
Interest income (expense), net		11,024				4,066			37,284				(3,409	)
Other (expense) income, net		(4,045	)			2,412			(10,769	)			565
Income before income taxes		30,102				25,909			154,915				89,967
Income tax benefit (expense)		7,842				54,384			(283	)			17,992
Net income	$	37,944			$	80,293		$	154,632			$	107,959
Net income per share:
Basic	$	0.13			$	0.28		$	0.53			$	0.38
Diluted	$	0.13			$	0.27		$	0.52			$	0.37
Weighted average shares outstanding:
Basic		296,264				289,751			294,051				287,700
Diluted		300,867				293,917			299,280				291,617

SHARE-BASED COMPENSATION
	Three Months Ended March 31,						Twelve Months Ended March 31,
	2024			2023			2024			2023
	(unaudited)
Cost of revenue	$	6,962		$	4,973		$	26,622		$	18,383
Research and development		19,424			12,067			69,543			41,406
Sales and marketing		16,939			13,748			65,762			51,147
General and administrative		12,273			11,233			46,969			35,938
Total share-based compensation expense	$	55,598		$	42,021		$	208,896		$	146,874

DYNATRACE, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
	March 31,
		2024				2023
Assets
Current assets:
Cash and cash equivalents	$	778,983			$	555,348
Short-term investments		57,891				—
Accounts receivable, net		602,739				442,518
Deferred commissions, current		98,935				83,029
Prepaid expenses and other current assets		66,749				37,289
Total current assets		1,605,297				1,118,184
Long-term investments		46,350				—
Property and equipment, net		53,325				53,576
Operating lease right-of-use asset, net		61,390				68,074
Goodwill		1,335,494				1,281,812
Intangible assets, net		50,995				63,599
Deferred tax assets, net		138,836				79,822
Deferred commissions, non-current		93,310				86,232
Other assets		24,782				14,048
Total assets	$	3,409,779			$	2,765,347
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	21,410			$	21,953
Accrued expenses, current		233,675				188,380
Deferred revenue, current		987,953				811,058
Operating lease liabilities, current		15,513				15,652
Total current liabilities		1,258,551				1,037,043
Deferred revenue, non-current		62,308				34,423
Accrued expenses, non-current		18,404				29,212
Operating lease liabilities, non-current		54,013				59,520
Deferred tax liabilities		1,013				280
Total liabilities		1,394,289				1,160,478
Shareholders' equity:
Common shares, $0.001 par value, 600,000,000 shares authorized, 296,962,547 and 290,411,108 shares issued and outstanding at March 31, 2024 and 2023, respectively		297				290
Additional paid-in capital		2,249,349				1,989,797
Accumulated deficit		(198,757	)			(353,389	)
Accumulated other comprehensive loss		(35,399	)			(31,829	)
Total shareholders' equity		2,015,490				1,604,869
Total liabilities and shareholders' equity	$	3,409,779			$	2,765,347

DYNATRACE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
	Year Ended March 31,
		2024				2023
Cash flows from operating activities:
Net income	$	154,632			$	107,959
Adjustments to reconcile net income to cash provided by operations:
Depreciation		15,499				12,541
Amortization		39,441				42,070
Share-based compensation		208,896				146,874
Loss on extinguishment of debt		—				5,925
Deferred income taxes		(59,915	)			(53,534	)
Other		11,216				988
Net change in operating assets and liabilities:
Accounts receivable		(161,888	)			(94,910	)
Deferred commissions		(23,520	)			(45,191	)
Prepaid expenses and other assets		(47,401	)			26,753
Accounts payable and accrued expenses		37,896				58,680
Operating leases, net		1,026				1,186
Deferred revenue		202,227				145,544
Net cash provided by operating activities		378,109				354,885
Cash flows from investing activities:
Purchase of property and equipment		(26,459	)			(21,540	)
Capitalized software additions		(5,268	)			—
Acquisition of businesses, net of cash acquired		(57,111	)			—
Purchases of investments		(104,210	)			—
Net cash used in investing activities		(193,048	)			(21,540	)
Cash flows from financing activities:
Repayment of term loans		—				(281,125	)
Debt issuance costs		—				(1,949	)
Proceeds from employee stock purchase plan		19,472				17,806
Proceeds from exercise of stock options		31,191				32,939
Equity repurchases		—				(15	)
Net cash used in financing activities		50,663				(232,344	)
Effect of exchange rates on cash and cash equivalents		(12,089	)			(8,620	)
Net increase in cash and cash equivalents		223,635				92,381
Cash and cash equivalents, beginning of year		555,348				462,967
Cash and cash equivalents, end of year	$	778,983			$	555,348

DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands)
	Three Months Ended March 31, 2024
	GAAP				Share-based compensation				Employer payroll taxes on employee stock transactions				Amortization of intangibles				Restructuring & other				Non-GAAP
Non-GAAP income from operations:
Cost of revenue	$	71,873			$	(6,962	)		$	(542	)		$	(4,230	)		$	—			$	60,139
Gross profit		308,975				6,962				542				4,230				—				320,709
Gross margin		81	%																			84	%
Research and development		84,271				(19,424	)			(1,055	)			—				(26	)			63,766
Sales and marketing		148,788				(16,939	)			(1,626	)			—				(615	)			129,608
General and administrative		47,338				(12,273	)			(392	)			—				(2,431	)			32,242
Amortization of other intangibles		5,455				—				—				(5,455	)			—				—
Income from operations	$	23,123			$	55,598			$	3,615			$	9,685			$	3,072			$	95,093
Operating margin		6	%																			25	%

	Three Months Ended March 31, 2023
	GAAP				Share-based compensation				Employer payroll taxes on employee stock transactions				Amortization of intangibles				Restructuring & other				Non-GAAP
Non-GAAP income from operations:
Cost of revenue	$	59,565			$	(4,973	)		$	(272	)		$	(3,895	)		$	—			$	50,425
Gross profit		254,910				4,973				272				3,895				—				264,050
Gross margin		81	%																			84	%
Research and development		61,502				(12,067	)			(445	)			—				—				48,990
Sales and marketing		124,702				(13,748	)			(1,143	)			—				(1,332	)			108,479
General and administrative		42,702				(11,233	)			(841	)			—				(1,982	)			28,646
Amortization of other intangibles		6,573				—				—				(6,573	)			—				—
Income from operations	$	19,431			$	42,021			$	2,701			$	10,468			$	3,314			$	77,935
Operating margin		6	%																			25	%

DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands, except per share data)
	Three Months Ended March 31,
		2024				2023
Non-GAAP net income:
Net income	$	37,944			$	80,293
Income tax benefit		(7,842	)			(54,384	)
Non-GAAP effective cash tax		(16,618	)			10,084
Interest income, net		(11,024	)			(4,066	)
Cash received from interest, net		10,926				4,440
Share-based compensation		55,598				42,021
Employer payroll taxes on employee stock transactions		3,615				2,701
Amortization of other intangibles		5,455				6,573
Amortization of acquired technology		4,230				3,895
Transaction, restructuring, and other		3,072				3,314
Loss (gain) on currency translation		4,045				(2,412	)
Non-GAAP net income	$	89,401			$	92,459
Share count:
Weighted-average shares outstanding - basic		296,264				289,751
Weighted-average shares outstanding - diluted		300,867				293,917
Shares used in non-GAAP per share calculations:
Weighted-average shares outstanding - basic		296,264				289,751
Weighted-average shares outstanding - diluted		300,867				293,917
Non-GAAP net income per share:
Net income per share - basic	$	0.13			$	0.28
Net income per share - diluted	$	0.13			$	0.27
Non-GAAP net income per share - basic	$	0.30			$	0.32
Non-GAAP net income per share - diluted	$	0.30			$	0.31

	Three Months Ended March 31,
		2024				2023
Free Cash Flow:
Net cash provided by operating activities	$	131,672			$	120,427
Purchase of property and equipment		(9,797	)			(5,915	)
Capitalized software additions		(613	)			—
Free Cash Flow	$	121,262			$	114,512

DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands)
	Year Ended March 31, 2024
	GAAP				Share-based compensation				Employer payroll taxes on employee stock transactions				Amortization of intangibles				Restructuring & other				Non-GAAP
Non-GAAP income from operations:
Cost of revenue	$	266,453			$	(26,622	)		$	(2,058	)		$	(16,265	)		$	—			$	221,508
Gross profit		1,164,077				26,622				2,058				16,265				—				1,209,022
Gross margin		81	%																			85	%
Research and development (1)		304,739				(69,543	)			(5,446	)			—				(26	)			229,724
Sales and marketing (1)		534,233				(65,762	)			(4,967	)			—				(216	)			463,288
General and administrative (1)		174,412				(46,969	)			(1,517	)			—				(8,155	)			117,771
Amortization of other intangibles		22,293				—				—				(22,293	)			—				—
Income from operations	$	128,400			$	208,896			$	13,988			$	38,558			$	8,397			$	398,239
Operating margin		9	%																			28	%

	Year Ended March 31, 2023
	GAAP				Share-based compensation				Employer payroll taxes on employee stock transactions				Amortization of intangibles				Restructuring & other				Non-GAAP
Non-GAAP income from operations:
Cost of revenue	$	222,891			$	(18,383	)		$	(798	)		$	(15,564	)		$	(380	)		$	187,766
Gross profit		935,639				18,383				798				15,564				380				970,764
Gross margin		81	%																			84	%
Research and development		218,349				(41,406	)			(1,704	)			—				—				175,239
Sales and marketing		448,015				(51,147	)			(2,338	)			—				(1,332	)			393,198
General and administrative		150,172				(35,938	)			(1,351	)			—				(2,347	)			110,536
Amortization of other intangibles		26,292				—				—				(26,292	)			—				—
Income from operations	$	92,811			$	146,874			$	6,191			$	41,856			$	4,059			$	291,791
Operating margin		8	%																			25	%

DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands, except per share data)
	Year Ended March 31,
		2024				2023
Non-GAAP net income:
Net income	$	154,632			$	107,959
Income tax expense (benefit)		283				(17,992	)
Non-GAAP effective cash tax		(75,604	)			(13,370	)
Interest (income) expense, net		(37,284	)			3,409
Cash received from interest, net		35,482				3,803
Share-based compensation		208,896				146,874
Employer payroll taxes on employee stock transactions		13,988				6,191
Amortization of other intangibles		22,293				26,292
Amortization of acquired technology		16,265				15,564
Transaction, restructuring, and other		8,397				4,059
Loss (gain) on currency translation		10,769				(565	)
Non-GAAP net income	$	358,117			$	282,224
Share count:
Weighted-average shares outstanding - basic		294,051				287,700
Weighted-average shares outstanding - diluted		299,280				291,617
Shares used in non-GAAP per share calculations:
Weighted-average shares outstanding - basic		294,051				287,700
Weighted-average shares outstanding - diluted		299,280				291,617
Non-GAAP net income per share:
Net income per share - basic	$	0.53			$	0.38
Net income per share - diluted	$	0.52			$	0.37
Non-GAAP net income per share - basic	$	1.22			$	0.98
Non-GAAP net income per share - diluted	$	1.20			$	0.97

	Year Ended March 31,
		2024				2023
Free Cash Flow:
Net cash provided by operating activities	$	378,109			$	354,885
Purchase of property and equipment		(26,459	)			(21,540	)
Capitalized software additions		(5,268	)			—
Free Cash Flow		346,382				333,345

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240515870566/en/

Investor Contact:

Noelle Faris

VP, Investor Relations

Noelle.Faris@dynatrace.com

Media Relations:

Jerome Stewart

VP, Marketing

Jerome.Stewart@dynatrace.com

Source: Dynatrace

FAQ

What were Dynatrace's Q4 FY24 financial results?

Dynatrace reported Q4 FY24 total revenue of $381 million, a 21% increase, and an ARR of $1.504 billion, marking a 20% growth.

How did Dynatrace's subscription revenue perform in FY24?

Dynatrace's subscription revenue increased by 25% in FY24, reaching $1.359 billion.

What is the significance of Dynatrace's share repurchase program?

Dynatrace announced a $500 million share repurchase program, reflecting confidence in its business and future growth prospects.

What was Dynatrace's GAAP EPS for FY24?

Dynatrace reported a GAAP EPS of $0.52 for FY24.

Did Dynatrace complete any acquisitions in FY24?

Yes, Dynatrace successfully acquired Runecast, enhancing its AI-driven security and compliance capabilities.

What was Dynatrace's Q4 FY24 non-GAAP operating margin?

Dynatrace's non-GAAP operating margin for Q4 FY24 was 25%.